While they play chess...

I received my daily newsletter from Simon Black (Sovereign Man) today, and he talks about the recent decision of the Chinese to try and make the renminbi a new international currency. The current world currencies (or fiats, as they're sometimes called) are the US Dollar, the Euro, and the Japanese Yen. These are the only three currencies today that have a large enough circulation (and subsequent backing of government)  to be able to absorb massive investment or divestiture of those same currencies. Imagine a $100B investment in any other world economy, and you can see what a large percentage of the local economy it would be - the local currency couldn't absorb it. The Chinese, I think, are interested in creating a fourth - or, more significantly, becoming the de-facto standard for world currency (much like gold or the US Dollar have been in the past).  The rest of the world goes merrily along minding it's own business, while one nation sets in motion a plan that may take a decade or more to complete.


Therein lies the rub. The Chinese have a distinct advantage to all other Western-style economies. Ours are based on democracy and elections, and theirs are based on strategy and long-term thinking. We make decisions that will seem popular for the next election cycle, and they make decisions based on their country's position in a decade or more. They're busy playing chess, and we're busy playing checkers...http://www.sovereignman.com/expat/opening-a-renminbi-savings-account-in-the-us/